Question

Pharoah Company assembled the following information in completing its March bank reconciliation: Balance per bank $23700 Outstanding checks $4800 Deposits in transit $7750 NSF check $500 Bank service charge $155 Cash balance per books $27280 As a result of this reconciliation, Pharoah will reduce its cash account by $2950. reduce its cash account by $155. increase its cash account by $345. reduce its cash account by $655.

Answer 1

Answer:

Pharaoh will reduce its cash balance by $1,130

None of the answer options was correct, maybe something was missing in the question like notes collected or other NSF checks.

Explanation:

Pharaoh Company's bank reconciliation:

balance per bank account   $23,700

- outstanding checks            ($4,800)

+ deposits in transit                 $7,750

- NSF checks                            ($500)

total                                        $26,150

- cash balance per books    ($27,280)

difference                               ($1,130)

In order to reconcile the bank account, we do not consider any bank service fees because they are already included in the bank balance. What we must consider are the NSF checks that we deposited and thought were good checks, but instead they bounced.